Somerfield sales growth wanes

SOMERFIELD, Britain's sixth-biggest supermarkets chain, admitted today that it is feeling the heat of competition.

The extent to which Tesco has taken control of the supermarket sector has forced rivals onto the defensive and Somerfield, which operates a total of 1,224 stores, 523 of them under the Kwik Save brand, blamed tough competition for slower sales growth so far this year.

Chief executive Steve Back said the company was also facing food price deflation.

Sales in the 28 weeks to 6 November were up 0.6% but on a like-for-like basis were up just 0.9%, less than the 2.2% growth enjoyed previously.

Full half-year figures will be unveiled in January - but Back said the latest numbers were in line with management expectations.

The company had had a worse summer than in 2003 thanks to the poor weather, which meant that expected sales of ice cream, beer and barbecue products did not materialise.

Sales were even less favourable when set against the bumper summer last year when Britain basked in record temperatures.

The group has bought a number of former Safeway Compact stores and converted 21 of them to the Somerfield format.

Mr Back said the acquisition added considerable new space for the group and represented an excellent opportunity to take advantage of its expertise in running smaller food supermarkets and its national distribution network.

He said the acquisition of these new stores should boost profits in the first full year of their inclusion. All are now trading under the Somerfield brand and doing well, Back added.

Somerfield isn't the only retailer struggling in the current competitive market. New data shows that William Morrison's share of the UK grocery market is still sliding.

Figures from analysts Taylor Nelson Sofres show that the combined market share of WM Morrison and Safeway, the supermarket chain it bought for £3bn last March, fell to 13.2% in the 12 weeks to 7 November - from 13.4% in the 12 weeks to 10 October.

In the corresponding period last year, the combined market share was 14.8%, according to the TNS data.